14-Dec-2012 12:39 PM

IATA: Profit outlook upgraded; airline industry prospects for 2013 largely unchanged from 2012

IATA released (13-Dec-2012) its Dec-2012 airline industry financial forecast, revising its industry profit forecast to USD6.7 billion, up from the Oct-2012 outlook of USD4.1 billion.

Forecast highlights:

  • 2012 forecast: USD6.7 billion, industry net post-tax margin of 1%;
  • 2013 forecast: USD8.4 billion, up from USD7.5 billion in the Oct-2012 forecast, industry net post-tax margin of 1.3%.

2013 forecast drivers:

  • Global GDP: Expected to strengthen only slightly to 2.3% in 2013;
  • Passenger traffic:
    • Demand: 4.5%, -0.8 ppts year-on-year;
    • Yield: -0.2%;
  • Cargo:
    • Demand: 1.4%, +3.4 ppts;
    • Yield: -1.5%;
  • Fuel:
    • Oil prices: USD104 per barrel, -5%;
    • Jet fuel: USD124.3 per barrel, -4%.

Regional forecasts:

  • North America:
    • Net profit: USD3.4 billion, +41.6%;
    • EBIT margin: 3.8%, +0.4 ppts;
  • Europe:
    • Breakeven forecast, steady;
    • EBIT margin: 0.6%, steady;
  • Asia Pacific:
    • Net profit: USD3.2 billion, +6.7%;
    • EBIT margin: 4.7%;
  • Middle East
    • Net profit: USD1.1 billion, +37.5%;
    • EBIT margin: 3%;
  • Latin American:
    • Net profit: USD700 million, +75%;
    • EBIT margin: 3.1%;
  • Africa:

IATA: “With GDP growth close to the ‘stall speed’ of 2.0% and oil at USD109.5 per barrel we expected much weaker performance. But airlines have adjusted to this difficult environment through improving efficiency and restructuring. That is protecting cash flows against weak economic growth and high fuel prices.... It’s a diverging picture. Economies of scale are helping larger airlines to cope much better with the difficult environment than small and medium-sized carriers which continue to struggle,” Tony Tyler, director general and CEO. Source: Company statement, 13-Dec-2012.

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